Different levels of infrastructure in countries can be explained by unique pre-conditions that every country faces, including geographic traits and financial resources. As the figures below illustrates, huge infrastructure quality and spending gaps remain between countries. Crucially, pre-conditions also include different politicians’ and constituencies’ perceptions of the ideal policy combination on the one hand, and the right incentives for infrastructure development on the other. In other words, the relative strength or weakness of the governance environment can determine how developed a country’s infrastructure is. These governance differences across countries are especially visible in regulated industries where services are essential and the risk of market failure is high, such as in water and electricity utilities, ports, toll roads, and airports.
Often, incentives and special interests determine which public infrastructure investments are realized – these projects do not necessarily yield the social and economic benefits that their costs and prestige would warrant. More useful projects do not always provide as much status for politicians. However, as demonstrated by the figure below, the strength of public sector management and institutions is highly correlated with the quality of overall infrastructure across the globe. Thus, the key for any future government is to achieve the necessary political buy-in for less politically prestigious infrastructure projects, such as sewage systems rather than giant airports.
